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SEC Charges Canada-Based "Robo-Adviser" with Defrauding U.S. Investors

June 3, 2021

File No. 3-20358

June 3, 2021 - The Securities and Exchange Commission today announced a settled enforcement action against Emperor Investments, Inc., a Canada-based robo-adviser registered as an investment adviser with the Commission. The SEC charged Emperor with making false and misleading statements on its website about its performance and using paid bloggers to solicit U.S. investors without adequate disclosure.

According to the SEC's order, from June 2018 until October 2019, Emperor operated a robo-adviser, an automated digital investment advisory program that was marketed to individuals through Emperor's website and social media platforms. The SEC found that, throughout its operation, Emperor disseminated misleading marketing materials and performance data on its website, which was accessible to clients and prospective clients. For example, Emperor stated that it had outperformed the market for the past 11 years when, in fact, the claim was based on modeled returns and Emperor had been in operation for less than two years-during which time it underperformed the market. The SEC also found that Emperor paid bloggers, which were a significant source of Emperor's new clients, for referrals without complying with cash solicitation disclosure and documentation requirements. In addition, the SEC found that Emperor failed to adopt or implement policies and procedures reasonably designed to prevent these securities law violations.

Without admitting or denying the SEC's findings, Emperor consented to a cease-and-desist order finding that it violated the antifraud provisions of Sections 206(2) and 206(4) of the Advisers Act and Rules 206(4)-1, 206(4)-3, and 206(4)-7 thereunder, imposing a censure, and ordering it to pay a civil penalty of $25,000.

The SEC's investigation was conducted by Vincent T. Hull and Luke Fitzgerald with assistance from Dan Pines, and was supervised by Andrew Dean, all of the Enforcement Division's Asset Management Unit.

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